Is Gold Jewellery A Good Gold Investment Option For Good Returns?

Gold jewelleries are probably the most popular gold investment instrument among Indians. India does not produce enough gold to meet the country's domestic demands for gold, so imports gold from the foreign markets. India and China are two top countries in terms of gold consumption.

Gifting gold is an integrated part of marriage rituals in Indian societies, while weddings generate approximately 50% of annual gold demand in India. For these rituals, gold jewelleries play one of the most important roles. Along with the purpose of rituals, buyers think these gold jewelleries will be good investments when they will be in need. This is certainly a correct approach toward investment, as the yellow metal is a hedge against gold, and gives good returns in long term. But investors nowadays are exploring new options for gold investments.

Gold jewelleries as an investment include the costing for making charges, GST along with storage costs. These charges can impact your profitability, at the time of resale. So, the options of digital gold, RBI sovereign gold bonds, gold funds, and gold ETFs can be explored.

The RBI sovereign gold bond or SGBs are probably the best possible gold investment option, according to some analysts. These bonds come with government securities and no storage costs. SGBs can be obtained when the government will release the tranche date. Otherwise, you can also buy SGBs from the secondary markets. On the other hand, gold funds and gold ETFs can be purchased from online investment portals like Zerodha and Groww, etc. Digital Golds are available in UPI mobile apps like PhonePe and Google Pay. The online gold investment instruments would not burden you with the making charges and storage costs if you are buying gold only for investment purposes.

Not just in India, internationally, investors are realizing the potential of gold, and they are also investing in online gold investment options, rather than gold jewelleries. The World Gold Council has recently informed, globally, "Q1 2022, gold demand increased y-o-y as strong ETF flows offset weaker jewellery and retail investment. In a quarter that saw the US dollar gold price rise by 8%, gold demand (excluding OTC) increased 34% y-o-y to 1,234t - the highest since Q4 2018 and 19% above the five-year average of 1,039t. Gold ETFs had their strongest quarterly inflows since Q3 2020, fuelled by safe-haven demand. Holdings jumped by 269t, more than reversing the 174t annual net outflow from 2021." Recently, the Ukraine invasion and climbing inflation rate were major factors driving both the gold price and demand.